How Homo Economicus Went Extinct

How Homo Economicus Went Extinct

This Wall Street Journal review (see below) explores the scientific research which shows, “most people would rather walk away from a deal with nothing rather than take an offer they consider unfair.” This research is an important foundation for our work at Mobus Creative Negotiating.

We have posted separately a New York Times OpEd in which University of Chicago economist Richard Thaler summarizes his critique of economists for assuming that humans act like Star Trek’s Spock: ignoring emotion, doing only what logic dictates. What we are highlighting today is a Wall Street Journal review of Thaler’s new book, Misbehaving (Norton, $27.95) by Carol Tavris, a social psychologist. She finds it a “highly enjoyable intellectual autobiography” in which Thaler details how hard it has been to inject “good psychology and other social sciences” into economics. Thaler argues, “by including real people in economic theory, economists will improve predictions of human behavior, make better financial and marketing decisions and create a field that is more interesting and fun than regular economics.”

Economic Man Negotiation Training

Economic Man

The delicious irony explored by Thaler is that many economists refuse to let empirical evidence and scientific research shake their blind faith that people are purely logical rather than being shaped by emotions as well — in other words, economists let their emotions get in the way of being logical, while denying that people ever do any such a thing.

We at Mobus Creative Negotiating make full use of behavioral economists and social psychologists including Richard Thaler and Carol Tavris. We teach you how to negotiate with real people, whose decisions are influenced by emotions and not just Spock-like logic. Our work is based on the most up-to-date scientific research, not the outdated “rational economic man” (or “homo economicus”) views from the last century.

A synopsis of “How Homo Economicus Went Extinct” can be read on Prof. Aristides N. Hatzis (University of Athens) blog.

The full Wall Street Journal article (for subscribers) can be read at the WSJ site.

— Patrick Clawson